An electronic scoreboard at the Korea Exchange in Seoul, South Korea
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US chip stocks were under fresh pressure on Tuesday.
AI sentiment took a hit after a weak market debut from a South Korean neocloud company.
Meanwhile, oil prices spiked to their highest levels in months amid new Middle East tensions.
US chip stocks came under renewed pressure on Tuesday, shaken by a grim market debut for a South Korean neocloud company.
The offering from Elice, a cloud infrastructure firm viewed as the country’s biggest Kosdaq index listing of the year, plunged 32% on its first day of trading. It dragged several other prominent South Korean tech stocks down as well, including Samsung and Sk hynix , while the benchmark KOSPI index ended the day down 4%.
The jarringly negative sentiment around a company in a critical corner of the AI trade leaked into US markets as trading began, with major chip and memory stocks tumbling.
Here were some of the big moves in the space:
Cerebras Systems : -4%
Nvidia : -2%
Micron Technology : -2.5%
Sandisk : -3%
Intel : -3.5%
Advanced Micro Devices : -2.4%
Adding to the negative mix was CoreWeave, the US neocloud stock that was hammered by fears around its debt last week. CoreWeave shares dropped as much as 6% before paring the loss. The stock was weighed down by the wider AI hardware weakness, while reports of a bearish note from HSBC that flagged “structural concerns” for neocloud companies deepened the sell-off.
Elsewhere, oil markets were volatile again on Tuesday. Brent oil shot up to $111 per barrel, the highest level in five months, on fears of attacks on shipping and production facilities in Saudi Arabia.
The surge in crude, however, didn’t prompt a new spike in the 10-year Treasury yield. Instead, yields were weighed down by a string of weak housing data this week. Data showing tepid housing starts in September came a day after homebuilder sentiment was the lowest in 14 years.
Volatility in South Korean tech woes rippling into US markets has become a familiar theme this year. A a similar sell-off last week was sparked by concerns about prominent South Korean chip firms being threatened by competition from China.
David Morrison, a senior market analyst at TradeNation, noted that this development shows that investors are still highly concerned about AI-adjacent companies, noting that Firmus, an Australian data center group with backing from Nvidia , recently scrapped its plans for a $5 billion IPO.
“A look at the charts of individual stocks within the US chip sector this morning, and indeed AI-adjacent stocks as well, shows that the selloff since the beginning of this month, or indeed from late September in some cases, may not have completed yet,” he stated.
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